The garage in Palo Alto, California, where William Hewlett and David Packard began building …

Reproduced with permission of the Hewlett-Packard Company Archives

Founding and early growth

The company was founded on January 1, 1939, by William R. Hewlett and David Packard, two recent electrical-engineering graduates of Stanford University. It was the first of many technology companies to benefit from the ideas and support of engineering professor Frederick Terman, who pioneered the strong relationship between Stanford and what eventually emerged as Silicon Valley. The company established its reputation as a maker of sophisticated instrumentation. Its first customer was Walt Disney Productions, which purchased eight audio oscillators to use in the making of its full-length animated film Fantasia (1940). During World War II the company developed products for military applications that were important enough to merit Packard a draft exemption, while Hewlett served in the Army Signal Corps. Throughout the war the company worked with the Naval Research Laboratory to build counter-radar technology and advanced artillery shell fuses.

Postwar growth

After the war, Packard became responsible for the company’s business, while Hewlett led its research and development efforts. Following a postwar slump in defense contracts, in 1947 Hewlett-Packard returned to the revenue levels of the war years and grew continuously thereafter through a strategy of product diversification. One of its most popular early products was a high-speed frequency counter that it introduced in 1951. It was used in the rapidly growing market of FM radio and television broadcast stations for precisely setting signal frequencies according to Federal Communications Commission regulations. Military sales during the Korean War also boosted company revenues.

To help fund the development of new products, Hewlett-Packard raised money by issuing public stock in 1957. In addition, it embarked on a long campaign of expanding its product line by acquiring companies, beginning the year after it went public with the purchase of F.L. Moseley Company, a maker of graphic recorders. In 1961 it began its climb to status as a medical-instrument manufacturer with the purchase of Sanborn Company.

In 1964 Hewlett-Packard instrumentation gained international recognition in a technological publicity stunt. Company engineers flew around the world with its cesium beam HP 5060A instrument to synchronize the globe’s atomic clocks to within one-millionth of a second. Four years later the company introduced the first desktop calculator. In 1972, using advanced integrated-circuit technology, Hewlett-Packard unveiled the first pocket-sized calculator. Selling at one-sixth the price of the original desktop unit, the pocket calculator eventually forced the obsolescence of the venerable slide rule.

Hewlett-Packard’s HP-35 calculator, 1972.

Reproduced with permission of the Hewlett-Packard Company Archives

Although the company never developed weapons systems, it depended heavily throughout its history on military spending, because its instrumentation has been used to develop and test military products, particularly as weapons systems have become more dependent on electronic and semiconductor technologies. The military expertise of Hewlett-Packard was underscored in 1969 when U.S. Pres. Richard M. Nixon appointed Packard deputy secretary of defense, in which position he oversaw the initial plans for the development of two of the country’s most successful jet fighter programs, the F-16 and the A-10.

Computer business

Hewlett-Packard’s first computer, the HP 2116A, was developed in 1966 specifically to manage the company’s test and measurement devices. In 1972 the company released the HP 3000 general-purpose minicomputer—a product line that remains in use today—for use in business. In 1976 an engineering intern at the company, Stephen G. Wozniak, built a prototype for the first personal computer (PC) and offered it to the company. Hewlett-Packard declined and gave Wozniak all rights to his idea; later he joined with Steven P. Jobs to create Apple Computer, Inc. (now Apple Inc.).

Hewlett-Packard introduced its first desktop computer, the HP-85, in 1980. Because it was incompatible with the IBM PC, which became the industry standard, it was a failure. The company’s next major foray into the PC market was with the HP-150, an IBM PC-compatible system that had a touch screen. Although technically interesting, it also failed in the marketplace. The company’s first successful product for the PC market was actually a printer. The HP LaserJet appeared in 1984 to rave reviews and huge sales, becoming Hewlett-Packard’s single most successful product.

In the mid-1980s Hewlett-Packard found itself losing business in its core fields of science and engineering to rival computer workstation companies such as Sun Microsystems, Inc., Silicon Graphics, Inc., and Apollo Computer. In 1989 Hewlett-Packard bought Apollo to become the number one workstation maker, a position it shared on and off with Sun and later Dell Inc.

As the 1990s began, the company missed some revenue and profit targets, causing a steep decline in its stock price. As a result, Packard came out of retirement to take an active role in the management of the company. The most dramatic changes came in its lacklustre PC group with the introduction of new computers, colour printers, and peripherals at low prices that made the company one of the world’s top three PC manufacturers. In 1993, with the company turnaround complete, Packard retired again. In 1997 Hewlett-Packard became one of the 30 companies whose stock price makes up the Dow Jones Industrial Average of the New York Stock Exchange. In 1999 the company spun off its measurement, electronic components, and medical businesses as Agilent Technologies, though it retained a majority of the new company’s common stock until 2000. Also during the 1990s, Hewlett-Packard collaborated with the Intel Corporation, an integrated circuit manufacturer, in the design of the 64-bit Itanium microprocessor, which was introduced in 2001.

During the 2000s, Hewlett-Packard expanded its worldwide operations by opening research laboratories in Bangalore, India (2002), Beijing, China (2005), and St. Petersburg, Russia (2007); these joined a list that included laboratories in Bristol, England (1984), Tokyo, Japan (1990), and Haifa, Israel (1994).

Hewlett-Packard acquired the Compaq Computer Corporation, a major American PC manufacturer, in 2002. The move, made at the urging of the recently hired chief executive officer (CEO), Carly Fiorina, the first woman to lead a company listed in the Dow Jones, was bitterly opposed by some members of the company’s board of directors and certain major stockholders, including Walter Hewlett, son of the company’s cofounder. When the supposed benefits of the merger failed to materialize, she was forced out in 2005. Nevertheless, the company soon turned its balance sheet around, and in 2007 Hewlett-Packard became the first technology company to exceed $100 billion in sales revenue for a fiscal year (after first passing IBM in revenue the year before).

Fiorina was replaced as CEO and president by Mark Hurd, who had been CEO of NCR Corporation. (Hurd added the chairman title in 2006.) During Hurd’s tenure the company began a strategic initiative to expand into the mobile-computing arena. To that end, in 2010 Hewlett-Packard acquired Palm, Inc., an American manufacturer of personal digital assistants (PDAs) and smartphones. Palm’s position in the highly competitive smartphone market was weak, but its multitasking operating system, known as webOS (a “next generation” successor to the original Palm OS), was considered by analysts to be a leading system for smartphones. The acquisition would complement Hewlett-Packard’s two lines of iPAQ smartphones, one for business users and one for consumers, that ran Microsoft Corporation’s Windows Mobile OS.

However, Hurd was forced out of the company in 2010 after a scandal involving questionable relations with a contractor. He was replaced by Léo Apotheker, who had been CEO of German software giant SAP. In August 2011 Hewlett-Packard announced that it would discontinue making smartphones and its tablet computer, the TouchPad (which had debuted only seven weeks earlier in July), and that it was considering spinning off its PC business into a separate company. Henceforth, Hewlett-Packard would concentrate on software and services for business, and it acquired the British business software company Autonomy Corporation for $11.1 billion. Apotheker was replaced as CEO in September 2011 by board member Meg Whitman, who had been CEO of the online auction company eBay. In November 2012 Hewlett-Packard accused Autonomy’s management of inflating the value of the company through “accounting improprieties” and announced it would write down Autonomy’s value by $8.8 billion.

Early in the company’s history, the two founders endorsed formal management procedures, and Hewlett-Packard was one of the first corporations to use the “management by objective” approach. They also created an informal workplace, encouraging the use of first names among employees, even for themselves. Packard and Hewlett were also known for “management by walking around,” visiting as many departments as possible without appointments or scheduled meetings and talking with line workers as often as with managers in order to understand how the company was operating. Hewlett-Packard became one of the first businesses in the United States to endorse the idea that employees, customers, and the community have as valid an interest in company performance as do shareholders. As a result, it consistently ranked among the best places to work for women and minorities. It also became one of the leading contributors to charitable organizations, donating as much as 4.4 percent of its pretax profits.

Britannica Web sites

The Hewlett-Packard Company is a U.S. electronics firm based in Palo Alto, Calif.; founded in 1938 by William Hewlett and David Packard, engineering graduates of Stanford Univ.; produced an audio oscillator that was used by Walt Disney studios in sound system for film Fantasia; made and marketed the first hand-held calculator in 1972; involved in fiber optics telecommunication; manufacturer of desktop and laptop computers; dominated the field of laser printers.